Civil Law and UAE: Normative Foundations of Private Obligations

1. Introduction

The normative foundations of private obligations concern the basic legal principles that explain why one private person is legally required to do something for another person.

An obligation may require a person to:

• pay money;
• deliver property;
• perform a service;
• refrain from particular conduct;
• compensate for damage;
• return an unjust benefit;
• respect a contractual undertaking;
• act according to good faith;
• perform a statutory duty.

Under the UAE's current Federal Decree-Law No. 25 of 2025 promulgating the Civil Transactions Law, effective 1 June 2026, the theory of obligations continues the basic civil-law structure while introducing important reforms concerning contract formation, pre-contractual conduct, interpretation, remedies and allocation of contractual risk.

The central normative idea can be expressed as:

A legally recognized relationship, event, undertaking or benefit creates a reason for the law to require performance, restitution or compensation.

2. What Does "Normative Foundation" Mean?

"Normative" means the legal reason or principle that justifies an obligation.

For example:

Contract

A promises to sell goods to B.

Normative foundation: voluntary agreement.

Tort

A negligently damages B's property.

Normative foundation: the legal duty not to cause wrongful harm.

Unjust enrichment

A receives money that legally belongs to B without a valid basis.

Normative foundation: a person should not retain an unjustified benefit at another's expense.

Beneficial act

A person lawfully manages another person's affairs in circumstances recognized by law.

Normative foundation: the law protects certain useful interventions even without a conventional contract.

Thus, private obligations are not based on one single principle.

3. Principal Sources of Private Obligations

The UAE civil-law system can broadly be organized around:

1. contract;
2. unilateral acts where legally recognized;
3. harmful acts/tort;
4. beneficial acts;
5. unjust enrichment;
6. statute and other legally recognized sources.

The new Civil Transactions Law retains this foundational theory of obligations while updating several areas. Legal commentary on the new Code specifically identifies contract, tortious liability, beneficial acts and unjust enrichment as core sources of obligations.

4. First Foundation — Freedom of Contract

One of the fundamental foundations of private obligations is consent.

Under current Article 120 of the Civil Transactions Law:

• the governing principle of a contract is the consent of the parties and what they have committed themselves to;
• contractual intention is relevant;
• literal meaning remains important;
• commercial custom can form part of contractual understanding;
• contracts are interpreted in a manner consistent with justice and good faith. 

Therefore:

Consent → Contract → Binding obligation

This reflects the civil-law principle of pacta sunt servanda—contractual commitments must generally be respected.

5. Case Law 1 — Dubai Court of Cassation, Commercial Appeals Nos. 1555/2024 and 1574/2024

In a judgment delivered on 28 January 2026, the Dubai Court of Cassation considered the enforceability of a lease-assignment arrangement used as security for banking facilities.

The Court reaffirmed that:

a contract constitutes the law governing the parties and each party is bound by its contractual obligations.

It also emphasized performance according to contractual terms and good faith and held that clear contractual language should generally be applied as written.

Normative significance

This case illustrates the principle that the voluntary assumption of contractual obligations creates a legally enforceable normative relationship.

The obligation exists because the parties intentionally placed themselves under a legally recognized commitment.

6. Second Foundation — Good Faith

Good faith is one of the most important normative principles in UAE private law.

The current Civil Transactions Law strengthens the concept in several areas.

Article 120 expressly requires contractual interpretation to achieve justice and good faith between the parties.

The new law also extends good-faith obligations into the pre-contractual negotiation stage.

Articles 121–123 address:

• good-faith negotiation;
• disclosure of essential information;
• confidentiality;
• liability for bad-faith termination of negotiations. 

This represents an important development from the previous regime.

7. Case Law 2 — Dubai Court of Cassation, Recent Real-Estate Decision

The Dubai Court of Cassation has applied the former Article 246 principle that contracts must be performed according to their terms and consistently with good faith.

The Court recognized that contractual obligations include not only express contractual promises but also obligations arising from:

• law;
• custom;
• the nature of the transaction.

Normative significance

The case demonstrates that good faith does not necessarily rewrite the contract.

Instead, it helps determine:

how an existing contractual obligation must be performed.

Thus:

Contract = source of obligation
Good faith = standard governing performance.

8. Third Foundation — Binding Force of Contract

The binding force of contracts is closely connected to contractual autonomy.

Once a valid contract is concluded:

Party A cannot ordinarily treat the obligation as optional merely because performance later becomes inconvenient.

The new Civil Transactions Law continues this fundamental principle.

The 2026 Dubai Court of Cassation banking decision is particularly useful because it confirmed that a party cannot unilaterally modify a clear contractual arrangement unless there is:

• mutual consent;
• judicial authority; or
• an applicable statutory basis. 

Example

A agrees to pay B AED 1 million on a specified date.

A later decides that the payment is inconvenient.

That inconvenience alone does not normally extinguish the obligation.

9. Fourth Foundation — Protection of Legitimate Expectations

Private obligations protect the expectations created by legally valid transactions.

This is particularly important in:

• long-term commercial contracts;
• construction contracts;
• financing;
• leases;
• sale agreements;
• distribution agreements;
• framework agreements.

The new Civil Transactions Law expressly recognizes framework agreements in Article 138, providing a structure for repeated or continuing contractual relationships.

Normative principle

A person who voluntarily creates a legally protected expectation through a valid undertaking may be required to respect that undertaking.

10. Case Law 3 — Dubai Court of Cassation, Judgment No. 7/2021

The Dubai Court of Cassation's General Assembly considered disputes concerning off-plan property contracts and the interaction between contractual arrangements and Dubai's property-registration framework.

The decision is important because it demonstrates that contractual obligations do not operate in isolation from mandatory statutory regimes governing the subject matter.

The Court's reasoning recognized that special legislation can affect how contractual rights operate.

Normative significance

This establishes an important qualification:

Freedom of contract operates within mandatory law.

Parties cannot contract out of every statutory rule.

11. Fifth Foundation — Mandatory Law and Public Order

Contractual autonomy is not unlimited.

The new Civil Transactions Law adopts a more structured conception of public order.

According to the new framework, provisions relating to:

• mandatory legal rules;
• applicable personal-status rules;
• conclusive Sharia principles within the statutory definition;
• the governmental system

can restrict private autonomy. Contracts or contractual terms contrary to the applicable mandatory framework can be invalid.

Therefore:

Private autonomy + mandatory law = enforceable private obligation

not:

Private autonomy without limits.

12. Sixth Foundation — Protection Against Abuse of Rights

A private right is not necessarily unlimited merely because the right legally belongs to a person.

The UAE civil-law tradition recognizes the doctrine of abuse of rights.

Examples can include:

• exercising a right solely to cause serious harm;
• pursuing an insignificant private benefit while causing disproportionate harm;
• using a legally recognized right for an unlawful purpose;
• exceeding accepted legal boundaries.

The doctrine provides a normative balance between:

individual autonomy

and

social responsibility in exercising private rights.

13. Seventh Foundation — Pre-Contractual Good Faith

The new Civil Transactions Law makes this area particularly important.

Article 121 provides that the proposal, conduct and termination of negotiations must comply with good faith.

Importantly:

Negotiating does not itself create an obligation to conclude the contract.

However, bad-faith negotiation or termination can generate liability for actual damage, subject to the statutory rules. The new law also limits recovery for an unexecuted contract by generally excluding expected profits/lost opportunities unless the parties agreed otherwise.

This produces a balanced normative model:

Freedom not to contract + responsibility to negotiate in good faith.

14. Case Law 4 — Dubai Court of Cassation, Appeal No. 267/2016

This is an important historical UAE authority concerning pre-contractual liability.

The parties negotiated a proposed lease, but the negotiations did not ultimately result in a completed contract. The property was subsequently leased to another party.

The Dubai Court of Cassation treated the relevant conduct as potentially giving rise to liability for actual damage even though the negotiations themselves had not created a concluded lease.

Normative significance

The case illustrates an important distinction:

No contractual obligation to conclude the contract ≠ complete freedom to conduct negotiations in bad faith.

The decision arose under the former legal framework, so it should now be used as historical support for the principle, while Articles 121–123 of the 2025 Civil Transactions Law provide the current statutory framework.

15. Eighth Foundation — Duty Not to Cause Wrongful Harm

Not every private obligation originates in agreement.

A person may become legally obligated because that person's conduct causes legally recognized damage to another.

The normative principle is:

A person should not wrongfully cause compensable harm to another.

This is the foundation of civil/tortious liability.

Example:

A negligently damages B's vehicle.

Even though A and B never had a contract, the law can create an obligation:

A → obligation to compensate B.

This demonstrates that private obligations can arise without consent.

16. Case Law 5 — Dubai Court of Cassation, Civil Appeal No. 309/2016

This authority concerned multiple persons alleged to be responsible for the same harm.

The former Civil Transactions Law framework required examination of the relevant elements of joint responsibility rather than simply treating every participant as liable.

Normative significance

The case demonstrates that tortious obligations arise from legally relevant responsibility, not merely from association with an event.

This is particularly important for:

• construction projects;
• corporate groups;
• professional teams;
• technology networks;
• multiple tortfeasors.

The current Article 253 of the 2025 Civil Transactions Law now specifically addresses situations involving multiple responsible persons.

17. Ninth Foundation — Unjust Enrichment

A person may also have an obligation because he or she has received a benefit without sufficient legal justification at another person's expense.

The normative principle is:

No person should retain an unjustified enrichment obtained at another's expense where the legal requirements for restitution are satisfied.

Example:

A bank accidentally transfers AED 100,000 to B.

B has not provided consideration for the amount.

A contractual relationship alone does not explain the obligation.

The law can nevertheless require B to restore the unjustified benefit.

18. Case Law 6 — Dubai Court of Cassation, Civil Appeal No. 157/2023

This case is useful for the relationship between beneficial acts, unjust enrichment and civil obligations.

The Court considered issues concerning enrichment/restitution and the applicable limitation framework.

Normative significance

The case illustrates that an obligation can arise even where:

• there is no conventional contract;
• the parties did not expressly agree to the obligation.

The legal basis instead comes from the principle that an unjustified benefit should not ordinarily be retained where the statutory conditions for restitution are satisfied.

19. Tenth Foundation — Beneficial Acts

Civil-law systems recognize that certain lawful acts undertaken for another person's benefit can produce legal consequences even without an ordinary contract.

This area includes situations where a person:

• manages another's affairs;
• incurs necessary expenses;
• takes useful action in another's interest;
• performs an act that the law treats as creating restitutionary consequences.

The normative basis is neither pure contract nor ordinary tort.

It is:

Protection of legitimate benefit and prevention of unfair shifting of costs.

20. Case Law 7 — Dubai Court of Cassation, Civil/Commercial Jurisprudence on Management and Restitution

UAE courts have historically recognized claims based upon beneficial acts and unjust enrichment where the factual and statutory conditions are established.

These cases demonstrate that courts distinguish between:

• a true contractual obligation;
• a tortious obligation;
• restitution arising from enrichment;
• reimbursement arising from beneficial conduct.

This classification is important because each source can have different rules concerning:

• proof;
• limitation;
• compensation;
• restitution;
• available defences.

21. Eleventh Foundation — Causation

Causation provides the bridge between conduct and civil responsibility.

It is particularly important in tort obligations.

The general structure is:

Conduct → Causal connection → Damage → Obligation to compensate

Without sufficient causation, damage alone does not necessarily create liability against a particular defendant.

This becomes particularly important in:

• medical negligence;
• environmental damage;
• AI systems;
• cybersecurity;
• construction;
• product liability;
• multi-party disputes.

22. Case Law 8 — Dubai Court of Cassation No. 402/2020

The Court considered liability under the dangerous-things regime in a dispute involving a yacht fire.

The claimant attempted to establish responsibility for the relevant equipment, but the Court found that the necessary causal connection between the equipment and the fire had not been adequately established.

The case therefore demonstrates:

Even special forms of civil liability do not eliminate causation.

More broadly, the decision is useful for understanding that the normative basis for an obligation must be connected to the actual damage claimed.

23. Twelfth Foundation — Compensation as Restoration

Compensation is another normative foundation of private obligations.

The objective is generally not to punish the defendant.

Instead, civil compensation seeks to address the claimant's legally recognized loss.

The current Civil Transactions Law deals with:

• material loss;
• lost profit where legally recoverable;
• moral damage;
• natural consequences;
• appropriate forms of restoration.

The new law also modifies the judicial treatment of agreed compensation under Article 340. Courts retain powers to reduce agreed compensation in specified circumstances, while recovery above the agreed amount is restricted where fraud or gross negligence is involved.

24. Normative Foundation of Agreed Compensation

Parties can sometimes agree in advance upon the amount or method of compensation for breach.

Why does the law recognize this?

Because it respects:

private autonomy + risk allocation + contractual certainty.

Example:

A construction contract provides:

AED 50,000 for each week of delay.

The clause allows parties to allocate the financial consequences of delay before a dispute occurs.

However, statutory controls remain applicable.

25. Thirteenth Foundation — Reliance and Good Faith

Private obligations also protect reasonable reliance created by:

• contractual promises;
• representations;
• established practices;
• commercial conduct;
• negotiations.

The new Civil Transactions Law's pre-contractual provisions strengthen this concept by imposing disclosure and confidentiality duties during negotiations.

The law therefore attempts to balance:

Party autonomy

A person remains free not to conclude a contract.

Reliance protection

A person cannot necessarily use negotiations in bad faith while causing legally recognized actual damage.

26. Privity as a Normative Foundation

A fundamental civil-law principle is that:

A contract normally creates rights and obligations between its parties.

This protects contractual autonomy and prevents arbitrary imposition of contractual burdens upon strangers.

However, legal systems recognize exceptions involving matters such as:

• assignment;
• succession;
• third-party beneficiary arrangements;
• guarantees;
• agency;
• statutory obligations.

A 2026 Dubai Court of Cassation decision concerning assignment and arbitration reaffirmed the general doctrine of privity, while recognizing the legal consequences of assignment and succession.

27. Case Law 9 — Dubai Court of Cassation, Case No. 1685/2025/445

The Court addressed the relationship between:

• assignment;
• contractual rights;
• arbitration clauses;
• successors.

The Court reaffirmed that contracts generally bind and benefit their parties, while an assignment can carry relevant contractual rights and accessories to the assignee in accordance with the law.

Normative significance

The case demonstrates that:

Privity protects parties, while assignment provides a legally recognized mechanism for transferring certain contractual rights and related obligations.

28. Classification of Normative Foundations

29. Relationship Between the Foundations

These foundations do not operate in complete isolation.

Consider:

A construction contract → contractor's contractual duty → contractor's negligent conduct → building damage → tort liability → compensation.

One factual situation may therefore involve several normative foundations simultaneously.

Similarly:

Bank transfer → contractual relationship → erroneous payment → unjust enrichment → restitution.

The court must identify the correct legal source because the classification can affect:

• burden of proof;
• limitation;
• available remedies;
• calculation of damages;
• contractual defences;
• allocation of responsibility.

30. Normative Foundations and Good Faith Under the 2025 Law

The new Civil Transactions Law makes good faith particularly important because it operates across different stages.

Before the contract

Articles 121–123:

• good-faith negotiations;
• disclosure;
• confidentiality.

At formation

Consent and legally valid contractual formation.

During performance

Article 120 and the contractual performance framework.

At breach

Remedies, termination and compensation.

Thus:

Good faith operates as a cross-cutting principle rather than a single isolated contractual rule.

31. Normative Foundations and Digital Transactions

The same principles apply to modern transactions.

For example:

Smart contract

The legal question remains:

What legally creates the obligation?

Possible answers include:

• valid agreement;
• statutory rule;
• recognized digital signature/evidence;
• restitution;
• tort.

AI transaction

The system itself does not automatically become the legal source of the obligation.

The court must identify:

Which human or legal person has the legally relevant right, duty or responsibility?

This prevents technology from obscuring the underlying legal relationship.

32. Normative Foundations in Distributed Harm

In a distributed-harm scenario:

Developer → platform → user → automated system → victim

the court should ask:

1. Was there a contract?
2. Was there a statutory obligation?
3. Was there harmful conduct?
4. Was there unjust enrichment?
5. Was a beneficial act involved?
6. Who controlled the relevant risk?
7. What caused the damage?
8. What remedy does the applicable source permit?

This is particularly important because one event can involve several independent sources of obligation.

33. Historical vs Current Law

An important point for UAE legal research is the 1 June 2026 transition.

Federal Decree-Law No. 25 of 2025 replaced Federal Law No. 5 of 1985 from that date. Legal analysis indicates that the new law is not intended to apply retrospectively; relationships and events arising before 1 June 2026 generally remain governed by the former framework for the rights and obligations arising from them.

Therefore, when citing older Court of Cassation cases:

Old case + old article number = historical authority

rather than automatically treating the old article number as current law.

This distinction is essential in an examination or legal memorandum.

34. Practical Example

Facts

A company contracts with B to construct a warehouse.

Later:

• A fails to follow contractual specifications;
• a structural defect develops;
• B suffers financial loss;
• an independent engineer contributed to the defective design.

Possible normative foundations include:

Contract

A's obligation arises from the construction contract.

Tort

If legally relevant wrongful conduct caused additional damage.

Decennial liability

If the statutory structural-liability conditions are satisfied.

Compensation

B may seek legally recoverable loss.

Good faith

The parties must perform and exercise contractual rights consistently with applicable good-faith requirements.

Thus one dispute can contain several normative foundations.

35. Key Case-Law Revision Table

The first six UAE authorities should be read in light of the new 2025 Code where the underlying dispute predates 1 June 2026.

36. Important Principles for Exams

Principle 1

Consent is a primary source of private obligations.

Principle 2

A valid contract generally binds the parties.

Principle 3

Good faith controls contractual conduct and, under the new law, also has an express pre-contractual role.

Principle 4

Mandatory law limits contractual freedom.

Principle 5

Tort creates obligations independently of contract.

Principle 6

Unjust enrichment can create restitutionary obligations without a contract.

Principle 7

Beneficial acts may create legally recognized reimbursement obligations.

Principle 8

Special statutory risks can create obligations without conventional proof of fault.

Principle 9

Causation connects wrongful conduct to compensable damage.

Principle 10

Compensation and restitution provide mechanisms for correcting legally recognized loss or unjustified benefit.

37. Conclusion

The normative foundations of private obligations in UAE civil law rest on a combination of private autonomy, binding contractual commitment, good faith, statutory duties, protection against wrongful harm, restitution, beneficial acts, risk allocation and compensation.

The most useful conceptual formula is:

Contract → Consent and binding force
Good faith → Proper exercise and performance of rights
Tort → Responsibility for wrongful harm
Unjust enrichment → Restitution of unjustified benefit
Beneficial acts → Protection of useful lawful intervention
Statute → Obligations imposed directly by law
Special risk rules → Liability without ordinary proof of fault
Remedies → Compensation, restitution, performance or termination

The 2025 Civil Transactions Law preserves this broad civil-law architecture while making significant changes to pre-contractual good faith, disclosure, contractual interpretation, remedies and risk allocation. Its Article 120 expressly links contractual interpretation with consent, contractual commitment, surrounding circumstances, justice and good faith, making these principles central to the modern UAE theory of private obligations.